There is an art to selling stock, or more importantly, knowing when to sell a stock. Which separates the good investors from the great ones.
In this case selling a stock leads to making a profit or taking a loss. Yes, taking a loss on purpose is a strategy. It may not seem right on the surface. But it frees up money, in what was a poor investment, so you can put that money to work somewhere else.
There’s also the other side. Where investors sell too early. Happy to make a small profit only to watch the stock double or triple in value over the next few years. There’s nothing wrong with locking in a profit. But if the company is still chugging along and nothing has changed, why would you sell a winner?
Unfortunately, investors are driven by a number of irrational issues that make us do things we really don’t want to do. The best example is holding a stock that has fallen hoping it will just get back to even. This is especially true when no amount of time will return it to its previous mediocrity. You’re better off selling early, take a loss if necessary and put that money to work somewhere else. Continue Reading…
Earnings season is a conflicting time for long-term investors. The idea of quarterly reports just fuels a short-term view of the market. Something long-term investors can get drawn into without discipline and patience. If you know what you’re looking for, the information gained from a quarterly earnings conference call can help you make money.